A woman talks on the phone at the Airbnb office in San Francisco on Aug. 2, 2016.Gabrielle Lurie/Reuters
Airbnb burned through more than US$1.2-billion in cash between mid-2019 and mid-2020, ahead of its high-profile initial public offering (IPO), the Information reported on Wednesday, citing financial documents.
The cash burn depleted more than a third of the company’s cash reserves as of March, 2019, after the COVID-19 pandemic-led plunge in global travel hurt Airbnb’s balance sheet that had already been weakened by huge spending on hiring and marketing, according to the report.
The biggest portion of the cash burn was in the first quarter of this year, when the company had to pay out travel refunds because of the pandemic, the report added.
Earlier this year, Airbnb raised US$2-billion in debt from investors such as Silver Lake and Sixth Street Partners.
Reuters reported last week that Airbnb is aiming to raise around US$3-billion in its upcoming IPO, citing people familiar with the matter, as it takes advantage of the unexpectedly sharp recovery in its business.
According to the Information report, Airbnb is expected to use that money in part to pay off the debt.
With millions of tourists cancelling plans for vacations, work trips and family visits, Airbnb had earlier said it was allocating US$250-million to help offset losses incurred by hosts.
In late March, it suspended its marketing activities to save US$800-million in 2020 and informed workers that its founders would take no salary for the next six months, while top executives would take a 50-per-cent cut.
Airbnb declined to comment.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.